India:
The Consumer Protection Act, 2019: An Overview

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The Parliament passed the Consumer Protection Bill, 2019 on
06.08.2019 to replace the Consumer Protection Act, 1986 ("1986
Act"). The President of India gave its assent to the Consumer
Protection Act, 2019 ("2019 Act") on 09.08.2019 and the
same will come into force on the date it is notified by the Central
Government. The 2019 Act has been enacted for the purpose of
providing timely and effective administration and settlement of
consumer disputes and related matters.

The Government instead of bringing an amendment in the 1986 Act,
enacted a new Act altogether so as to provide enhanced protection
to the consumers taking into consideration the booming e-commerce
industry and the modern methods of providing goods and services
such as online sales, tele-shopping, direct selling and multi-level
marketing in addition to the traditional methods.

The 2019 Act has brought in some major changes and provides for
more protection to the consumers in parimateria to the earlier 1986
Act which can be seen from the comprehensive definition provided
for the term 'Consumer' and 'Unfair Trade
Practice'. The 2019 Act expands the scope of the definition of
Consumer so as to include the consumers involved in online
transactions and it now squarely covers the E-commerce businesses
within its ambit. The 2019 Act has also widened the definition of
Unfair Trade Practices as compared to the 1986 Act which now
includes within its ambit online misleading advertisements; the
practice of not issuing bill/memo for the goods and services;
failing to take back defective goods or deactivate defective
services and refund the amount within the stipulated time mentioned
in the bill or memo or within 30 days in the absence of such
stipulation; and disclosing personal information of a consumer
unless such disclosure is in accordance with law.

The 2019 Act has also introduced the concept of 'unfair
contract' which includes those contracts, which favor the
manufacturers or service providers and are against the interest of
the consumers such as contracts requiring manifestly excessive
security deposits to be given by a consumer for the performance of
contractual obligations; imposing any penalty on the consumer for a
breach of the contract, which is wholly disproportionate to the
loss occurred due to such breach to the other party to the
contract; refusing to accept early repayment of debts on payment of
applicable penalty; entitlement of a party to the contract to
terminate such contract unilaterally, without reasonable cause;
permitting or has the effect of permitting one party to assign the
contract to the detriment of the other party who is a consumer,
without his consent; and imposing on the consumer any unreasonable
charge, obligation or condition which puts such a consumer to any
disadvantage. Such unfair consumer contracts are now covered under
the 2019 Act and a complaint in this regard can now be filed by a
consumer. This would help to keep a check on businesses including
banks and e-commerce sites that take advantage of their dominance
in the market and mandatorily require the helpless consumers to
sign such unfair contracts and accept their standard terms before
selling them goods or providing services.

One of the most significant additions to the 2019 Act is the
proposal to establish Central Consumer Protection Authority
("CCPA") so as to regulate, protect and enforce the
interest of the consumers and matters related to unfair trade
practices. The CCPA has been provided with vast powers to inquire,
investigate and take action against violations of the 2019 Act.
Another significant power the CCPA has been showered with, is the
power to take action and impose penalty against misleading and
false advertisement as well as against any endorser of such
advertisement, which means the CCPAcan now initiate action against
the celebrities who have endorsed such misleading and false
advertisement provided such celebrities failed to carry out any due
diligence before participating in such advertisements. The CCPA may
impose a penalty of up to Rs.10 Lakhs for first violation and up to
Rs.50 Lakhs on every subsequent violation on a manufacturer or an
endorser, for a false or misleading advertisement. In addition to
this, such manufacturer or endorser may be sentenced to
imprisonment for upto two years. The CCPA has also been granted the
authority to initiate suo-moto proceedings against violators; pass
directions to recall products or discontinue services and provide
refund to consumers; and file class action suits on behalf of
multiple consumers which makes it an effective tool to curb mass
violation of consumer interest.

Another major introduction in the 2019 Act is the concept of
Product Liability which covers within its ambit the product
manufacturer, product service provider and product seller, for any
claim for compensation. The term 'product liability' is
defined by the 2019 Act as the responsibility of a product
manufacturer or product seller, of any product or service, related
to the product to compensate for any harm caused to a consumer by
such defective product manufactured or sold or by deficiency in
services relating to the product. Also, since the product seller
has now been defined to include a person who is involved in placing
the product for a commercial purpose and as such would include
e-commerce platforms as well. Therefore, the ground commonly taken
by E-commerce websites that they merely act as 'platforms'
or 'aggregators' will now not be tenable before the court
anymore. There are increased liability risks for manufacturers as
compared to product service providers and product sellers,
considering that under the 2019 Act, manufacturers will be liable
in product liability action even where they successfully prove that
they were not negligent or fraudulent in making the express
warranty of a product. However, certain exceptions have been
provided under the 2019 Act from liability claims, such as, that
the product seller will not be liable where the product has been
misused, altered or modified.

As far as the Consumer Redressal Forums are concerned, certain
key changes have been brought by the 2019 Act such as:-

Territorial Jurisdiction
– The 2019 Act now provides an added advantage to the
consumers by providing for filing of complaints where the
complainant resides or personally works for gain as against the
1986 Act which only provides for filing of complaint where the
opposite party resides or carry on business. This would help in
removing the difficulties faced by the consumers in seeking
redressal of their grievances against businesses who may not have
an office or branch in their state.

Pecuniary Jurisdiction
– The 2019 Act also changed the pecuniary jurisdiction for
the District, State and National Commissions, respectively. The
pecuniary limit for the District Commission has been increased to
up to Rs.1 Crore from up to Rs.20 Lakhs; for State Commission it
has been increased to up to Rs.10 Crores from up to Rs.1 Crore; and
for National Commission the pecuniary jurisdiction has been
increased to over and above Rs.10 Crores as against Rs.1 Crore in
the 1986 Act. In addition to this, the 2019 Act has also changed
the manner for determining the pecuniary jurisdiction for filing
the Complaint. Now the pecuniary jurisdiction will be determined on
the basis of the value of goods or services paid as consideration
as against the 1986 Act wherein, the pecuniary jurisdiction was
determined as per the value of goods and services as well as
compensation claimed. This would help in doing away the practice of
inflating the compensation claimed so as to bring the complaint
within the jurisdiction of State or National Commission.

Alternate Dispute Resolution
– Another provision introduced by the 2019 Act to ensure
speedy resolution of disputes is to provide for referring the
disputes to mediation. As per the 2019 Act, the Consumer Forum
shall refer the matter to mediation on written consent of both the
parties. For this purpose, the 2019 Act also provides for
establishment of a consumer mediation cell by the respective State
Governments in each District Commission and State Commission as
well as at the National Commission by the Central Government.

E-Complaints - The 2019 Act
also provides for filing of Complaints before the District Forums
electronically in accordance with the rules which are yet to be
prescribed by the Government.

Conclusively, the Consumer Protection Act, 2019 when compared
with the 1986 Act shows that it provides for greater protection of
consumer interests taking into consideration the current age of
digitization. The 2019 Act also deals with the technological
advancements in the industry, provides for easier filing of
complaints and also imposes strict liability on businesses
including endorsers for violating the interest of the consumers.
However, the test of time will prove the fate of the 2019 Act as
and when it is notified by the Central Government, which,
prima-facie, appears to be much more consumer-friendly than the
1986 Act and also includes the current industry trends of
e-commerce.

The Consumer Protection Act, 1986 was enacted to provide for better protection of the interests of consumers and for the purpose of making provision for establishment of consumer protection councils and other authorities for the settlement of consumer disputes, etc.

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